COMMISSIONER OF WEALTH TAX Vs. R CHIDAMBARANATHA MUDALIAR

JUDGEMENT

(1.) THE facts leading to this reference are as follows: The assessee is an individual, On the valuation date relevant to the asst. yr. 1972-73, the assessee had fixed deposits in Nationalised Banks amounting to more than Rs. 3 lakhs and also National Defence Certificates, amounting to Rs. 25,000. In the return filed for wealth-tax purposes, the assessee had claimed exemption for an amount of Rs. 1,50,000 in respect of fixed deposits in the banks and an additional exemption of Rs. 25,000 under the proviso to s. 5(1A) of the WT Act, 1957 ('the Act"). This was allowed by the WTO. Subsequently, the WTO rectified the assessment under s. 35 of the Act on the ground that under the proviso to s. 5(1A), the exemption was available in excess of the ceiling prescribed only if the total value of the National Defence Certificates held by the assessee exceeded the limit of Rs. 1,50,000. The assessee appealed and the AAC agreed with the assessee that it is not necessary to hold Defence Bonds of the value of more than Rs. 1,50,000 for availing of the additional exemption under the proviso to s. 5(1A) . The Revenue appealed to the Tribunal. The Tribunal held that there was no mistake apparent on the face of the record and, accordingly, upheld the cancellation of the rectification order made by the AAC.

(2.) ON these facts, at the instance of the Revenue, the following question has been referred to the decision of this Court:

(3.) WE have considered the submissions of both sides. We find that the decisions interpreting the proviso to s. 5(1A) of the Act were not available to the WTO when he made the original assessment or at the time when he made the rectification. The AAC had accepted the interpretation placed by the assessee. Moreover, when the Finance Minister had declared that it was the intention of the legislature to totally exempt the Defence Bonds, the construction of the proviso literally to grant an exemption only if the holding exceeded Rs.1,50,000 leads to the unintended withdrawal of the exemption in respect of the other assets. This is perhaps the reason why the Act has also since been amended to ensure that the specified assets in the proviso are eligible for total exemption. Further, the expression 'such limit shall be raised by the said amount' which occurs in the proviso would well mean that the specified assets would be exempted without any limit. From that point of view, it cannot be said that the claim of the assessee that it is not necessary to hold that Defence Bonds of the value beyond the ceiling prescribed for obtaining the exemption is not far-fetched. In the circumstances, we are satisfied that there was a debatable issue at the time the rectification was made even though the issue might have been resolved by a subsequent decision. The Tribunal was, therefore, right in finding that there was no mistake apparent on the face of the record and, thus, upholding the order of the AAC cancelling the rectification. Accordingly, we answer the question in the affirmative and against the Revenue . No costs.